Reasons to Refinance Your Mortgage

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OK so the home mortgage market and home ownership path has been anything but fun over the past few years, those looking to get on the property ladder have seen reductions in the availability of mortgages in the first place and need for larger deposits.    On the other hand, those of us already on the ladder have seen stagnating prices at best and a lot have suffered a loss.  However, not all is doom and gloom, now may be the time to save some cash and refinance your mortgage.

Why You May Benefit From Refinancing Your Mortgage

Interest Rates – If you financed your mortgage in the days before the crash, you probably also financed at rates of interest which were far higher than they are now.  If this is the case moving to a mortgage financed at today’s rates is likely to be much more attractive.

Equity – Many people when financing their first home would have saved only the bare minimum deposit, around 10%.  If this was the case you probably got a mortgage at a rate which was higher than would have been available with a larger deposit.  However, if it’s been a few years since you financed and the equity has built up in your home, this could make you much more attractive as a borrower.  Even a small increase in the equity (say to 15%) can make a difference and make a change worthwhile.

Credit Ratings – Having repaid a mortgage over a number of years is a great way to improve your credit rating.  Even just the fact that you have had a mortgage for a number of years may now make you more attractive to banks and mortgage issuers thus making those monthly repayments lower.

Things to Watch Out For in Refinancing Your Mortgage

Type of Mortgage – Make sure you are comparing like with like.  Tracker rates are usually lower than fixed rates, although if you’re coming to the end of a fixed rate, to get a fair comparison you need to consider the rate on the same kind of mortgage even if you do end up opting for a tracker rate.

Fees – While refinancing may result in considerable cost savings, there are also some costs too look out for.  These include exit costs from your current mortgage provider and product fees charged by the prospective new provider.

Valuation – In moving to a new mortgage provider you may also need to get a valuation on the property, this can again add costs to the operation.

So while the current mortgage market isn’t great, if you’ve been in your existing property for a number of years or are coming to the end of a fixed rate period, now could be the time save on those monthly repayment by shopping around for a better deal.